Kentucky Medicaid Decision Jump-Starts Work Requirements

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By Victoria Pelham

The Trump administration’s approval of a Kentucky Medicaid waiver, which for the first time ties coverage to employment, has likely kicked off a spate of similar restrictions that could shrink the scale of the country’s largest provider of health coverage.

Nine other states have asked to impose Medicaid work and community engagement requirements: Arizona, Arkansas, Indiana, Kansas, Maine, New Hampshire, North Carolina, Utah, and Wisconsin, according to the Centers for Medicare & Medicaid Services. And buoyed by CMS support of Kentucky’s request, more will now follow suit, Patricia Boozang, a senior managing director with Manatt Health, told Bloomberg Law.

The tougher eligibility standards are an about-face from previous rejections under former President Barack Obama. And they will likely lead to coverage losses, especially among those who are ill with chronic conditions such as diabetes or substance use disorders, patient advocates predict. At issue is whether the requirements spur Medicaid beneficiaries to self-sufficiency and, thus, better health outcomes—meeting Medicaid’s goals—or if those who work are already healthier, causing the waivers to boot those who can’t work from the health-care safety net program.

The Kentucky waiver’s approval is a “back-door way of undermining” the Medicaid expansion, in the shadows of 2017’s failed attempt to repeal it, Judith Solomon, vice president for health policy at the left-leaning Center on Budget and Policy Priorities, said on a Jan. 16 press call.

Scaling Back Medicaid

Boozang noted data pointing to declines in enrollment under work requirements in Temporary Assistance for Needy Families and food assistance programs, with states seeing decreases of up to 80 percent in Maine.

“We could be risking the same kind of drop-off in Medicaid especially because it’s a bigger program,” she said. “It’s more complex, not only in terms of numbers but in terms of how people relate to these programs.”

The idea is in line with CMS Administrator Seema Verma’s vision for Medicaid that able-bodied, working-age adults shouldn’t be covered under a program intended for the disabled and seniors, experts said. Newly approved work requirements are targeted to cutting people out of the program, especially the single adult group of expansion enrollees, Boozang added. Obamacare’s Medicaid expansion grew the rolls by about 11 million people.

Medicaid overhaul proposals could continue to pop up in Congress, but in the absence of their passage, the Trump administration will likely continue to act on regulatory changes to the program, Boozang said.

The expansion was supposed to offer coverage to low-wage workers who didn’t have access to employer insurance, Solomon said.

Kentucky’s waiver, which also includes lock-out periods, could lead those who are working but not at a consistent 80-hour-per month rate to lose coverage, she said. That could lead their health to ultimately worsen, without access to medicine.

Dangerous Pathway?

“These are very dangerous pathways we’re going down,” Joan Alker, executive director of the Georgetown University Center for Children and Families, said. “It’s a more subtle path than a full chopping off, cutting everybody off in one swoop ... but it is a step backwards for sure.”

The CMS issued a guidance just ahead of the Kentucky decision spelling out how states can add work and community engagement restrictions to Medicaid. These included exceptions and safeguards for medically frail people and the disabled.

But Solomon cautioned that many will “have a problem proving the exemption.”

Further, she expects the “vast majority” of those kicked off Medicaid will become uninsured, leaving providers who serve large numbers of the poor worried about compensation for their care.

Prompting Proposals

Governors of both South Dakota and South Carolina announced amid the flurry of CMS action that the states are also looking to add the eligibility restrictions.

“Whenever possible, we should always endeavor to help South Carolinians in need find their path to gainful employment and away from the temporary assistance of government,” Gov. Henry McMaster (R) said in a statement. “A good, steady job makes everything better, it creates a better home life, results in healthier lifestyles, and provides financial independence and opportunity.”

The Trump administration also believes its new approach allowing states to test the requirements will promote independence and health, according to the guidance. Officials point to links between unemployment and poorer health, including depression, and on the flip side, between higher wages and longer lives.

Verma also tweeted that the move had no bearing on pregnant mothers, children, seniors, or the disabled.

Implementation Challenges

The national move tying employment (or related activities such as volunteer work) to Medicaid could still face challenges in coming months, both in courtrooms and on the ground.

The National Health Law Program called the CMS work requirements guidance on “wobbly legal ground” and asked for more time for comments on pending waivers. Families USA, a liberal advocacy group, has pledged to back legal challenges.

While experts don’t believe that will be enough to dissuade states from pursuing work requirements, it could pose a risk as they build “very significant and very complex infrastructure to support these requirements,” Boozang noted.

Medicaid officials’ inclusion of caveats to ensure ability-to-work limits are fairly applied will result in “significant” implementation burdens, she said.

However, it’s still unclear the degree of evidence states will have to offer to meet the conditions. “What that means for states is ... it’s a little bit of: ‘Be careful what you wish for,’” she said.

To contact the reporter on this story: Victoria Pelham in Washington at vpelham@bloomberglaw.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bloomberglaw.com

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